Photo credit:

“I buy on the assumption that they could close the market the next day and not reopen it for five years.”

— Warren Buffett

This inspiring quote from Warren Buffett teaches us the importance of considering our investment time horizon when approaching any given investment: Could we envision ourselves holding the stock we are considering for many years? Even a five year holding period potentially?

For “buy-and-hold” investors taking a long-term view, what’s important isn’t the short-term stock market fluctuations that will inevitably occur, but what happens over the long haul. Looking back 5 years to 2016, investors considering an investment into shares of Illumina Inc (NASD: ILMN) may have been pondering this very question and thinking about their potential investment result over a full five year time horizon. Here’s how that would have worked out.

Start date: 06/22/2016


End date: 06/21/2021
Start price/share: $140.89
End price/share: $461.05
Starting shares: 70.98
Ending shares: 70.98
Dividends reinvested/share: $0.00
Total return: 227.24%
Average annual return: 26.76%
Starting investment: $10,000.00
Ending investment: $32,727.37

As shown above, the five year investment result worked out exceptionally well, with an annualized rate of return of 26.76%. This would have turned a $10K investment made 5 years ago into $32,727.37 today (as of 06/21/2021). On a total return basis, that’s a result of 227.24% (something to think about: how might ILMN shares perform over the next 5 years?). [These numbers were computed with the Dividend Channel DRIP Returns Calculator.]

Here’s one more great investment quote before you go:
“Behind every stock is a company. Find out what it’s doing.” — Peter Lynch